This should’ve been Reid Bigland’s year.
Under his leadership, Fiat Chrysler Automobiles outsold its competitors in Canada for the first time in the auto maker’s history while enjoying an unprecedented streak of rising sales in the United States. The success earned Mr. Bigland a promotion to head Fiat Chrysler’s Alfa Romeo and Maserati brands, making him one of chairman Sergio Marchionne’s most trusted deputies.
Now, Mr. Bigland, the 49-year-old head of U.S. sales and chief executive officer of Fiat Chrysler Canada, is at the centre of U.S. criminal and regulatory investigations into whether the company fraudulently hyped its monthly sales numbers, according to people familiar with the matter. The probe has implications that may go far beyond Fiat Chrysler, potentially upending the U.S. auto industry’s way of reporting sales, long designed to showcase them in the most positive light possible.
For many dealers around the United States, it’s just a given that Mr. Bigland, a charismatic speaker with chiselled features and a bodybuilder’s frame, pushes hard for results. For them, he’s the tough but fair leader, at once beloved for his cheerleading yet sometimes feared for his ever-escalating demands for higher sales.
“Reid will tell you what he expects and there’s no sleight of hand,” said Tom Leonard, co-owner of Fury Motors in South St. Paul, Minn. “He gives us a number, and we have to figure out how to hit it.”
Auto makers have been leaning on dealers for decades to move cars off their lots, a pressure that has long been accepted as part of the business. It’s not just consumer purchasing at issue. Investors also weigh monthly sales reports closely for signs of how auto companies are faring. But now the U.S. government is questioning whether Fiat Chrysler’s tactics have gone too far.
Mr. Bigland’s signature is displayed on documents filed with the Securities and Exchange Commission containing some of the disputed sales figures. The monthly sales reports often contain statements from Mr. Bigland touting monthly results and a streak of continually rising sales that he said went back to 2010. The sales streak was also highlighted in other filings, including Fiat Chrysler’s 2015 annual report.
Until last November, Fiat Chrysler Canada publicly touted a winning streak that had lasted 72 months since the end of the 2008-09 recession. That streak continued through June of this year, except that Fiat Chrysler restated its sales numbers going back as far January, 2011.
Those numbers showed that the winning streak for Canadian sales actually ended in April, 2012.
Investigators are eager to determine whether documents were falsified and, if so, whether company officials may have known what they were signing. The investigations follow lawsuits filed this year that allege company officials offered money to dealers to falsify sales.
The company and Mr. Bigland declined, through a spokeswoman, to comment. But in a news conference near Detroit late last month, Mr. Marchionne said “we continue to collaborate with authorities. We inherited a sales-reporting system that goes back to the 1980s. We now have found a way to do it that has absolute integrity.”
In July, after Bloomberg News reported a criminal investigation was under way, the auto maker restated its monthly sales numbers, noting that out of 7.7 million reported deliveries, only 4,500 vehicles over a six-year time span were in question. And it pointed out that quarterly revenues, based on deliveries from plants to dealers, were not affected by the restatement.
Still, the recalculation shortened the auto maker’s previously reported sales-growth streak by three years, ending in 2013 rather than 2016. Fiat Chrysler’s shares fell 4.3 per cent the day after it released the revised numbers and an additional 4.8 per cent the following day.
The news was a blow to investors because Fiat Chrysler has impressed over the years with its steadily rising sales. The auto maker’s monthly results, with their drum-like beat of incremental increases, evoke an earlier era when many U.S. companies engineered their earnings to surpass expectations by pennies to please Wall Street.
Investigators are examining whether Fiat Chrysler improperly adjusted monthly numbers to show growth over the prior year, a person familiar with the matter said. They are looking into allegations the company ordered dealers to create false vehicle purchases, some of which were made in the names of friends and relatives of salespeople, including underage family members, the person said.
The allegations get even stranger. Investigators are probing calls from Fiat Chrysler officials to dealers saying its department of “unnatural acts” was open for business, the person familiar said. The question is whether those calls had any relationship to allegations that company officials were urging dealers to falsify sales to meet reporting targets, the person said.
The U.S. Justice Department declined to comment.
Bloomberg News, with files from staffReport Typo/Error